TMI Blog2022 (10) TMI 144X X X X Extracts X X X X X X X X Extracts X X X X ..... tedly the subject lands were delivered to the respondent/corporate debtor mistakenly/wrongly by APIIC, besides results in deprivation of the constitutional right of the Applicants to hold their property. Even though the object behind imposing moratorium under section 14 of IB Code, is to prevent depletion of a corporate debtor's assets, in our considered view the same cannot be extended to the properties which are not in rightful possession of the corporate debtor as any such extension to the properties which are not in the rightful possession of the corporate debtor results in unjust enrichment by the corporate debtor, under the guise of 'maximisation' at the cost of the lawful owner of the property. Therefore, Section 14(1)(d) of the Code has no application when the corporate debtor is not in rightful possession of the property - the argument of the Ld. Counsel for the Resolution professional that Corporate Debtor is entitled to invoke Section 14(1)(d) of the Code, cannot be accepted. Whether APIICL is a necessary party to the present application? - If so, whether present Application is bad in law for non-joinder of APIICL? - HELD THAT:- In the case on APIICL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the Corporate Debtor. b. That the Applicants herein who are the owners and in continuance possession of the land admeasuring 40.23 acres, by carryout agriculture activities of on the said land. As soon as the Applicants came to know about the fact that the APIICL mistakenly had allotted their above to the Corporate Debtor, for setting up of power project, the Applicant filed a Writ Petition WP(C) Nos. 32019, 32245 of 2010 before the Hon'ble High Court of Andhra Pradesh, seeking the relief of writ of mandamus and/or directions to the Government of Andhra Pradesh and its agencies not to allot or interfere with possession and enjoyment of the Applicants above stated Patta Lands which is in their possession. c. That the Government of Andhra Pradesh and APIICL in the counter affidavit filed before the Hon'ble High Court of Andhra Pradesh admitted their mistake in taking over the lands belonging to the Applicants and in handing over the same to the Corporate Debtor. d. The Hon'ble High Court upon hearing the parties was pleased to allow the Writ Petition filed by the Applicants and passed the following order dated 18.11.2013: The state has accepted the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1.2019 and moratorium has been implemented. The Resolution Professional despite being made aware of the fact that the aforementioned lands have been mistakenly given to the Corporate Debtor. That the legal department of APIICL has also issued a letter dated 08.06.2020, directing the Resolution Professional to release the land belonging to the Applicants as the same are third party land and do not form part of the moratorium. However, the Corporate Debtor did not take any step to release the aforementioned lands and instead has invited expression of interest for selling the Corporate Debtor as a going concern. The said action of the Resolution Professional is prejudicial to the interest of the Applicants which necessitated the Applicants to approach this Tribunal for seeking relief. Thus, contending the Ld. Counsel for the Applicant prayed to allow the Application as prayed for. 3. The Respondent filed counter denying the allegations and averments made by the Applicants, inter-alia, contending that: a. That Andhra Pradesh Industrial Infrastructure Corporation Limited ( APIICL ) had vide letter dated July 27, 2018 informed the erstwhile management of the Corporate Debtor t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... otted the Disputed Lands to the Corporate Debtor. This amounts to non-joinder of parties and the Application is liable to be dismissed on this ground. APIICL which has failed to release the Disputed Lands to the Applicants and has not abided by the directions of the Hon'ble Andhra Pradesh High Court. Therefore, it would be necessary for APIICL to be impleaded in the present Application in order to provided reasoning for the same. i. It is APIICL which has been communicating with the Corporate Debtor and the Resolution Professional for surrender of the Disputed Lands. The Resolution Professional has informed APIICL that he is ready and willing to surrender the Disputed Lands but has requested for equivalent compensation. ii. It is evident that APIICL is a proper and necessary party as the lands cannot be handed over to the Applicants directly and the same would not be valid. However, if the Hon'ble Tribunal directs hand over of the Disputed Lands to APIICL, the same should be done balancing the interests of the Corporate Debtor. The Adjudicating Authority may allow the same by directing APIICL to allot equivalent land or compensation along with interest at 24% per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Resolution Professional vide Moratorium Letter dated 10.07.2020. Therefore, the claim of the Applicants/APIICL that as the Transferred Lands are lands belonging to third parties the same would not fall under moratorium is misconceived and against settled principles of law. h. The RP is duty bound to protect the value of the Corporate Debtor: i. The RP has duty under the Code to protect and preserve the value of the Corporate Debtor. Any order passed for handing over possession of land to the Applicant without simultaneous order of allotment of alternate land of similar size or value or compensation in lieu thereof shall amount to depriving the stakeholders of the value and be contrary to the objectives of the Code of maximising the value of Corporate Debtor. i. The Corporate Debtor is a bona fide, purchaser: i. The erstwhile vice president of the Corporate Debtor stated that they had spent a total sum of Rs. 2,86,16,735/- (Rupees Two Crores Eighty Six Lakhs Sixteen Thousand Seven Hundred and Thirty Five only) for purchasing lands from APIICL, which also includes the consideration paid to APIICL for the Disputed Lands. ii. The Corporate Debtor would b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IICL should be made a party to the present application, without which the issue raised in the application cannot be properly addressed to; i. That the Corporate Debtor did not challenge the order passed by the Hon'ble High Court of Andhra Pradesh in the aforementioned writ petitions and rather accepted the order and undertook to comply the same by releasing the subject lands. ii. The Corporate Debtor stated that due to negligence of APIICL, the Corporate Debtor was made to pay for the subject lands as well. Therefore, the Corporate Debtor to be allowed to possess the lands of the Applicants till APIICL refund the amount or allot lands in an adjacent area. The Corporate Debtor cannot put conditions as per the directions of the Hon'ble High Court for the release of lands belonging to the Applicants which the Corporate Debtor is in possession wrongfully. Therefore, there is no necessity for APIICL to be made a party in the present application. b. The Corporate Debtor cannot release the lands belonging to the Applicants as Section 14(i)(d) of the Insolvency and Bankruptcy Code 2016 is in operation. i. Any unlawful or wrongful occupation of any property in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ni Sheshagiri Rao, Ld. Counsel for the Applicants and Shri Suman Batra, Ld. Counsel for the Respondent, perused the record, written submissions and the case law. 8. Before proceed to decide on the Point above, we refer herein the following facts which are not in controversy:- a. That APIIC, the Writ Petitions (C) Nos. 32019, 32245 of 2010, filed by the Applicants herein before Hon'ble High Court of Andhra Pradesh, in its counter has categorically admitted that land of an extent of 40.23 Acres, belonging to the Applicants herein, has been included by mistake in the land that were handed over to the corporate debtor for setting up a power plant. b. The Hon'ble High Court has allowed the said Writ Petitions which were filed seeking a relief of writ of mandamus and/or directions to the Government of Andhra Pradesh and its agencies not to allot or interfere with possession and enjoyment of the Applicants of Patta Lands possessed by the Applicants as per the order dated 18.11.2013. c. The said order of the Hon'ble High Court was not challenged further before any other forum, thus, same has attained finality. As such there can be no dispute as to the title or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of current dues arising for the use or continuation of the license, permit, registration, quota, concession, clearances or a similar grant or right during the moratorium period;] (2) The supply of essential goods or services to the corporate debtor as may be specified shall not be terminated or suspended or interrupted during moratorium period. [(2A) Where the interim resolution professional or resolution professional, as the case may be, considers the supply of goods or services critical to protect and preserve the value of the corporate debtor and manage the operations of such corporate debtor as a going concern, then the supply of such goods or services shall not be terminated, suspended or interrupted during the period of moratorium, except where such corporate debtor has not paid dues arising from such supply during the moratorium period or in such circumstances [(3) The provisions of sub-section (1) shall not apply to-- [(a) such transactions, agreements or other arrangement as may be notified by the Central Government in consultation with any financial sector regulator or any other authority;] (b) a surety in a contract of guarantee to a corporate d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tor during the moratorium period applies provided such possession of the property is lawful. However, in the present case the Corporate Debtor had been holding the properties belonging to the Applicants who are third parties and had never given the said properties to the Corporate Debtor either by way of lease or otherwise. As such the moratorium under Section 14 is not applicable to the subject lands. h. Ld. Counsel for the Applicants placing reliance on Section 18(f)(vi), which is as below, 18. Duties of interim resolution professional.- ...... (f) take control and custody of any asset over which the corporate debtor has ownership rights as recorded in the balance sheet of the corporate debtor, or with information utility or the depository of securities or any other registry that records the ownership of assets including- ........ (iv) Intangible assets including intellectual property; i. Contended that even though the subject properties were shown in the balance sheet of the Corporate Debtor, in the light of the categorical finding of Hon'ble High Court vide its order dated 18.11.2013 that the applicants are the owners of the subject lands, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest of justice directs APIICL to either allot the Corporate Debtor a similar land of equivalent value so that the Corporate Debtor may retain its value or direct APIICL to repay the Corporate Debtor the entire amount it had paid to APIICL as consideration and spent on the subject land along with interest at 24% per annum from the date of the agreements of sale for the lands including the Disputed Lands. n. Having heard the Ld. Counsel for both sides at length, at the outset it may be stated that, in Words and Phrases Permanent Edition, Vol. 33 (1971), published by St. Paul, Minn. West Publishing Co., at pages 91-92, the word possession has been defined as below; 'Possession' as used in statute is not synonymous with physical bodily presence of adverse claimant; continuous bodily presence is not required but rather question is one of fact which must be determined from circumstances of each case. (Emphasis supplied) o. Indisputably, Hon'ble High Court of Andhra Pradesh, in the Writ Petition, supra, categorically held that 'the state has accepted the mistake of fact in acquiring the title and nature of holding of writ petitioners. This admis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to organise its affairs so that a new management may ultimately take over and bring the corporate debtor out of financial sickness, thus benefiting all stakeholders, which would include workmen of the corporate debtor. (Emphasis supplied) t. We have already held that the possession of subject property which is now with the corporate debtor, in the light of the order Hon'ble High Court of Andhra Pradesh, supra, the same cannot be termed as lawful . Therefore, even though the object behind imposing moratorium under section 14 of IB Code, is to prevent depletion of a corporate debtor's assets, in our considered view the same cannot be extended to the properties which are not in rightful possession of the corporate debtor as any such extension to the properties which are not in the rightful possession of the corporate debtor results in unjust enrichment by the corporate debtor, under the guise of 'maximisation' at the cost of the lawful owner of the property. Therefore, in our considered view Section 14(1)(d) of the Code has no application when the corporate debtor is not in rightful possession of the property. u. In view of our discussion as above, we ..... X X X X Extracts X X X X X X X X Extracts X X X X
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